Legislators from the dominant Fatah faction have endorsed a new cabinet for the Palestinian Authority, officials have said.
Abbas and Qurei had to agree on who will form the new cabinet
Fatah's approval should ensure the new government is passed by the Palestinian Legislative Council on Monday.
The decision came after a long debate, with many members demanding changes.
Meanwhile, Israel has begun to free 500 Palestinian prisoners on Monday, under terms agreed at a Middle East summit in Egypt earlier this month.
Observers say the formation of a new government had been held up by disagreements between Palestinian leader Mahmoud Abbas and Prime Minister Ahmed Qurei.
Most prominent among the new faces in the 24-member cabinet is Nasser Youssef, who becomes interior minister in charge of security forces.
Sharon agreed to free Palestinian prisoners at a summit with Abbas
Before his death last November, Mr Abbas' predecessor Yasser Arafat had resisted appointing Mr Youssef, an ex-general, over fears he would be too independent.
He replaces an old associate of Mr Arafat, Hakam Bilawi, in the
Former security chief Mohammed Dahlan, regarded as a key Abbas loyalist and negotiator with the Israelis, becomes minister for cabinet affairs.
The Palestinian ambassador to the UN, Nasser al-Kidwa, was named as foreign minister, replacing Nabil Shaath, who becomes deputy prime minister.
Intisar al-Wazir, also known as Um Jihad, whose long service as social affairs minister was dogged by accusations of corruption, has been replaced by Fatah legislative council member Dalal Salama.
Qaddoura Fares, a Fatah official, told Associated Press news agency that many Fatah members had been unhappy that more changes were not made to the old line-up.
The Palestinians' move comes a day after the Israeli cabinet voted to back Prime Minister Ariel Sharon's plan to withdraw soldiers and settlers from the Gaza Strip and parts of the West Bank.
The vote prompted a furious reaction from the Jewish settler lobby, who accused Mr Sharon of abandoning them.
But Palestinian militant group Hamas claimed victory, with spokesman Musher al-Masri telling the Associated Press news agency the pullout was "a result of the heroic resistance of our people".
Mr Sharon also won cabinet approval for a new route for the West Bank barrier, after Israel's Supreme Court ruled the previous route was needlessly disruptive to Palestinians' lives.
Over a third of Israel's separation barrier has already been built
Israel says the barrier is a temporary security measure aimed at preventing suicide bombers, but Palestinians condemn as a land grab.
The new route runs much closer to Israel's boundary with the West Bank than the original one but will still include 6-7% of West Bank territory on the Israeli side.
Palestinian chief negotiator Saeb Erekat said after Sunday's vote that continuing construction of the barrier would "undermine efforts to revive the peace process".
Hanan Ashrawi, a Palestinian legislator, accused Israel of "creating facts on the ground in the West Bank" in deciding the barrier's route.
About one-third of the barrier has already been built, mostly in the northern West Bank. Israel occupied the West Bank and Gaza Strip - home to about four million Palestinians - during the 1967 Six Day war.